UPDATE 1-Moody's upgrades Deutsche Bank, says outlook positive

(Updates with details)

FRANKFURT, Aug 4 (Reuters) - Moody’s said on Wednesday it had upgraded Deutsche Bank’s credit rating and the outlook was positive.

Credit ratings agencies have recently taken a rosier view of Germany’s largest lender as the bank returned to profit after years of losses.

Moody’s lifted Deutsche’s long-term rating to A2 from A3, and the positive outlook means further increases could be in the offing.

The bank is “likely to make continued progress towards meeting its medium-term targets, in particular by being able to sustain adequate, yet still relatively modest, profitability”, Moody’s said.

The bank embarked on a restructuring in 2019, closing some businesses and shedding thousands of staff in an effort to return to profitability. In 2020, the bank posted its first full-year profit since 2014.

Credit ratings are critical for any company but especially for a bank such as Deutsche, which, like all financial institutions, is a big issuer of debt securities.

Higher ratings can result in lower funding costs, helping Deutsche return to more sustainable profitability. (Reporting by Tom Sims Editing by Mark Heinrich, Kirsten Donovan)